Correlation Between Ebro Foods and Clean Power
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Clean Power at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ebro Foods and Clean Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Clean Power Hydrogen, you can compare the effects of market volatilities on Ebro Foods and Clean Power and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ebro Foods with a short position of Clean Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Clean Power.
Diversification Opportunities for Ebro Foods and Clean Power
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ebro and Clean is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Clean Power Hydrogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Power Hydrogen and Ebro Foods is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ebro Foods are associated (or correlated) with Clean Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Power Hydrogen has no effect on the direction of Ebro Foods i.e., Ebro Foods and Clean Power go up and down completely randomly.
Pair Corralation between Ebro Foods and Clean Power
Assuming the 90 days trading horizon Ebro Foods is expected to generate 0.17 times more return on investment than Clean Power. However, Ebro Foods is 6.06 times less risky than Clean Power. It trades about 0.01 of its potential returns per unit of risk. Clean Power Hydrogen is currently generating about -0.01 per unit of risk. If you would invest 1,575 in Ebro Foods on December 4, 2024 and sell it today you would earn a total of 55.00 from holding Ebro Foods or generate 3.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. Clean Power Hydrogen
Performance |
| Timeline |
| Ebro Foods |
| Clean Power Hydrogen |
Ebro Foods and Clean Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Clean Power
The main advantage of trading using opposite Ebro Foods and Clean Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Clean Power can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Clean Power will offset losses from the drop in Clean Power's long position.| Ebro Foods vs. Edinburgh Investment Trust | ||
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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